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The $100,000 a year waitress isn't a myth: Some hard truths about tipping in Canada

Tristin Hopper

Published: November 29, 2018 - 3:20 PM

Updated: December 13, 2018 - 1:35 PM

Last month, a widely circulated Reddit post complained a Vancouver liquor store was now asking customers to tip on their purchases. “What’s next, the freaking grocery store??” said writer OutrageousCamel.

Clearly, it’s gut-check time as a country. Tipping, a wildly irrational practice at the best of times, is beginning to enter entirely new frontiers of madness.

As many as 40 per cent of Canadians want tipping abolished and restaurants such as Earls are beginning to experiment with new “no tipping” policies. Despite this, the practice only seems to get stronger.

And it’s far from a harmless tradition. Below, some hard truths about the state of tipping in modern Canada.

Some tipped workers are staggeringly well paid In 2014, the Canadian job-finding site Workopolis.com interviewed a former waitress who had once pulled down the after-tax equivalent of $100,000 a year. Kate (her true name was concealed because she had evaded tax on much of those earnings) worked at a hotel bar and was pulling down as much as $6,000 per month in tips. “Sometimes I would make my rent in one shift,” she said. This is an anomaly, but it is not unusual for servers at bars or fine dining establishments to pull in wages much higher than the Canadian median. The University of Guelph’s Bruce McAdams is a restaurant industry veteran who has studied the effects of tipping on Canadian restaurants. His data showed that when tips are accounted for, the average Canadian server is making about $30 an hour — with a select few making the meteoric wages enjoyed by “Kate.” These are wages equivalent to those pulled in by a registered nurse, making serving one of Canada’s most lucrative jobs that can be obtained without post-secondary education. Server wages are particularly high in Canada because tips are often piled on top of high minimum wages. In select U.S. states, the salaries for restaurant workers are as low as $2 per hour, leaving servers almost wholly dependent on tips. But in Canada, the absolute lowest minimum wage is $9.45 in Quebec, with Albertans making as much as $15.

… while the back of house staff makes less than half as much A cook generally works longer hours than a server. While both server and cook must contend with the high-stress world of restaurant work, the cook must do it while enduring burns, cuts and the occasional vengeful lobster. Plus, unless most servers, a cook may have some industry-specific education such as a certificate from a culinary school. Despite all this, cooks are generally taking home $15 an hour to the server’s $30 an hour, said McAdams. “Servers are making twice as much as the cooks and our argument is they’re not creating twice as much value,” he said. Many restaurants try to spread the wealth with tip-out policies in which a server passes a portion of their tips to the kitchen. But even this generally only results in an extra dollar or two per hour going to line and prep cooks (tip-out policies are also notoriously rife for exploitation by crooked managers). And this is where talk of tipping reform gets dicey. Servers are currently benefiting from a system in which they receive a disproportionate share of the wage pie and any abolition of tipping is almost certainly going to result in a system wherein much of this advantage will be lost.

There’s no show called ‘Iron Server.’ Just saying.

There is almost nothing rational about tip compensation Lawyers are paid by the hour. Cab drivers are paid by the kilometre. But when it comes to waitstaff, there is often little to no rational connection between the services they render and the tip received. Opening a $100 bottle of wine and a $30 bottle of wine requires the same effort and yet at a rate of 15 per cent, one yields a tip of $15 and the other $4.50. The three-second action of a bartender snapping the cap off a beer bottle is expected to yield a tip of $1. Meanwhile, the heavily involved process of preparing a hot lemon and water pays nothing. “It’s simply an irrational custom that is deeply embedded in our culture,” said Marc S. Mentzer, a professor at the University of Saskatchewan’s Edwards School of Business who has written a history of tipping. Icelanders believe in fairies, Spaniards set charging bulls loose in their streets for fun and North Americans tip.

Pictured: An irrational cultural practice.

Tipping amounts don’t really change based on good service The generally accepted (and completely bogus) origin story of tipping is that it is an acronym for “to insure promptitude.” Thus, by holding out the promise of some extra coin, the diner ensures that their server hustles a bit harder than usual. “Tips are related to service, but only weakly,” Cornell University economist Wm. Michael Lynn, one of the world’s leading experts on tipping, told the National Post by email. His data shows that a measly two per cent of diners are altering their usual tip amount based on performance. The much more influential drivers of tip amount are factors such as the attractiveness of a server or what tip amount the patron is accustomed to paying. This is supported by Canadian data. A 2016 poll by the Angus Reid Institute found that only nine per cent of Canadians deviate from their standard tip if they receive good service. However, most servers seem to be tragically unaware that their tip amounts are in the hands of cruel fate. According to Lynn’s findings, about half of servers were still under the incorrect belief that working hard would get them a bigger tip.

Mandatory tipping is on the rise Meanwhile, a rising number of establishments are dispensing with the optional nature of tips altogether. Automatic gratuities (usually of 18 per cent) used to be reserved exclusively for large tables. That way, a server could have their time monopolized by a large group without the risk of being hung out to dry if the group skimped on the tip. But automatic gratuities are now showing up at resorts, hotels and even for airport porters. A not-infrequent occurrence is that an inebriated patron will pay a tip on their final bill without realizing that one was already slipped into their charges. “Of course, that’s a big surprise at 3 a.m. and, of course, I’m not looking at my bill at three in the morning closely,” one Toronto bargoer told CTV after discovering that she had tipped on a bill that already carried 18 per cent in “party” charges.

Tip creep is real In a post last year, radio host Amy Beeman detailed an average week in the life of Vancouver tipping: She was prompted to tip up to 25 per cent at her coffee shop. The same prompt turned up again at a self-serve frozen yogurt place. Finally, she was prompted for a tip at the liquor store. “Asking me to tip you when you have done nothing to deserve a tip is aggressive in an ‘in your face’ sort of way,” Beeman fumed. The culprit in all this is electronic payment machines. In an analogue era of cash or manual “clunk clunk” credit card machines, it would have been the height of gall for restaurants to provide their customers with a list of “expected” tips. But tip prompts of as high 30 per cent are now a standard feature of electronic pay machines. “Pressed for time, and faced with the challenge of calculating a more customary 15 percent gratuity on the fly, many people simply select the higher default options,” reads an analysis by City National Bank. Meanwhile, tip creep is encouraged by payment companies who boost their own earnings for every extra dollar flowing through the system. Square, a device that transforms any smartphone into a digital pay station, has become a particularly insidious agent of tip creep, delivering tip prompts at farmer’s markets, craft shows and even for girl guide cookies. What’s more, these electronic tips are often charged on top of sales tax. This is an easily missed detail, but it’s quietly funneling vast sums of money into the tip economy. For a 15 per cent tip on a bill of $100, for instance, tipping on tax sneaks in another $1.95 to the tip.

Convenient yet gratuitous.

Speaking of tax, a lot of servers don’t seem to be paying them Tips are one of the most satisfying forms of income. Rather than a staid cheque or some zeros added to a bank account, wait staff leave work with much of their earnings in the form of wads of bills. The Canada Revenue Agency requires that servers report all tips as taxable income. But whenever the CRA actually audits servers to see if they’re telling the truth, they find thousands of dollars that aren’t ending up on T1 slips. A 2012 CRA blitz on 145 servers in St. Catharines, Ont. discovered that all of them had hidden some portion of their income, with about half reporting no tips whatsoever. The total tax evasion worked out to about $12,000 per server. This is part of why the United States has dispensed completely with the notion of trusting servers. The U.S. Internal Revenue Service now requires employers to estimate a server’s total after-tip income and then withhold taxes from the full amount.

It promotes discrimination A group of middle-aged women generally doesn’t tip well. A group of young men from Bay Street generally does. A French tourist generally doesn’t tip. A Texan tourist does. Servers quickly learn the demographics of tipping and one of the hidden consequences of tipping is that it leads to clandestine discrimination among wait staff. Server discrimination is something that Canadians in border areas know all too well. “As a server, you dread the Canadians,” Syracuse, N.Y. waitress Bethany Wyatt told Syracuse.com in 2015. With Canadian tourists consistently tipping less than their American counterparts, some restaurants in Vermont have even instituted policies of tacking on mandatory gratuities if the server finds any reason to suspect they’re facing a table full of Canucks. Meanwhile, diners are discriminating right back at servers. A 2008 study by Michael Lynn even found that in the United States, black servers were generally tipped less than white servers — even when they were being tipped by black clientele.

Enthusiastic patriot to us. Nightmare to a Vermont server.

It’s tearing restaurants apart In the early 1900s, the average North American restaurant manager would have looked with deep suspicion on anyone trying to slip their waiter a gratuity. “He would look upon it as a bribe for giving an unusually large serving or the best cut of meat,” said Mentzer. A century later and Canadian restaurateurs complain of a practice that has utterly consumed their business model. “Almost anything bad in a restaurant, I can show you how tipping plays a part in it,” said McAdams. Inventory control? A manager can find servers funneling free booze and desserts to diners in order to boost their tip. Seating? Servers may start greasing the palms of hostesses in order to direct higher-tip tables to their section. Tipping installs a shadow economy in the workplace in which servers are incentivized to acts in ways that are often not beneficial to the restaurant as a whole. In a 2012 TEDx Talk, McAdams noted that one of the most glaring discords of tipping is that it effectively punishes diners for spending more. “You’re going to charge people more for service when they spend more in your restaurant?” he said.

‘Toxic’ tipping culture is real To see the most perverse consequences of the tip economy, look no further than certain notorious corners of Montreal. If a slate of online restaurant reviews are to be believed, the Quebec metropolis seethes with establishments where waitstaff will actively demand tips upfront, lie to customers that it is illegal not to tip and cut off service or confront clientele if the amount isn’t to their liking. In this 2017 Reddit post a Montreal bar customer details how they tipped 10 per cent for negligent bar service and ended up on the receiving end of a lecture on how tipping is done in Canada. “I’m guessing the reason he felt the need to outline that’s how it is in Canada is because I’m a brown guy,” wrote user CookieMonster1997. In the no-tipping realm of a shoe store or an A&W, it’s safe to say that these types of ugly confrontations aren’t a regular and expected cost of doing business.